Non Domicile Taxation

A non-domicile individual is a person who is resident in the UK but has a domicile of a different country. Such individuals can choose either to be taxed on the arising basis or on the remittance basis.

Arising Basis is where the individual is liable to tax on his worldwide income and gains including foreign sources of income and gains whereas in case of the remittance basis the individual is taxable on his UK income but his foreign income will be only taxable if it is remitted to the UK.

If an individual would like to make a claim for the remittance basis, he must make a claim under s. 809B ITA 2007. Individuals can opt in and out of remittance basis year-by-year if they choose.

Where income is taxed on the remittance basis, it is always taxed as non-savings income. The rates for the non-savings income are 20%, 40% and 45%.

A non-domicile individual can claim favorable treatment of the remittance basis for the first six years of his residency. There will be a remittance basis charge called the long residency charge if the individual has been resident in the UK for at least 7 out of the previous 9 tax years. Such individuals can only pay on the remittance basis if they agree to pay a remittance basis charge of £30,000.

Where the individual has been resident in the UK for at least 12 of the previous 14 tax years, there will be a higher remittance basis charge of £60,000. From 6 April 2015 individuals that have been resident in the UK for at least 17 of the preceding 20 tax years must pay a remittance basis charge of £90,000.

At Martax, we can help you with the following:

A detailed assessment of your current UK residency status

Advice on whether you should pay tax on an arising basis or the remittance basis

Advice on how you can reduce your tax bill

Preparation of your tax return and submission of the same with HMRC

Calculation of your tax liabilities and the due dates for the payment.

If you need any help or advice in relation to your residency status, please get in touch.

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